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employer non-RSP contributions

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  • Jun 25th, 2005 10:37 am
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[OP]
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Dec 2, 2004
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employer non-RSP contributions

Just wondering if this is standard at most companies. My employer offers RSP and non-RSP savings. With the non-RSP, they will match up to a max 2.5% after-tax on each paycheck. In my case, for one year that adds up to almost $400 they are contributing. THat's free money !! I recently stopped auto-transfer into my high interest banking account and instead raised my after-tax deductions for the non-RSP savings.

$28 annual return on high interest banking account

---OR ----


$400 annual return on employer contributions
:lol:
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Banned
May 5, 2003
4879 posts
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Toronto, Ontario
digidaze wrote:Just wondering if this is standard at most companies. My employer offers RSP and non-RSP savings. With the non-RSP, they will match up to a max 2.5% after-tax on each paycheck. In my case, for one year that adds up to almost $400 they are contributing. THat's free money !! I recently stopped auto-transfer into my high interest banking account and instead raised my after-tax deductions for the non-RSP savings.

$28 annual return on high interest banking account

---OR ----


$400 annual return on employer contributions
:lol:
What do they give you for RSP conributions? Do they match what you put in? What percentage?
[OP]
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Dec 2, 2004
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My employer will contribute a max of 2.5 % RSP / non-RSP combined. SO if I contribute 5% before tax (RSP ) and 5% after tax for a total of 10% they will only put in 2.5% for a grand total of 12.5%

The after tax savings is great little vacation savings account for me becuase I never see it, it just goes into my account. BEtween my personal contribution and the company's, I have nice windfall at the end of the year.
Deal Guru
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Feb 24, 2003
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You'd have to pay tax on the non-rsp contribution, right ?
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Jan 1, 2005
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I'd say the RSP one sounds better as you defer the tax, have higher after tax money.

But there are other things to conisder such as your tax bracket, cash flow, vacation plan,... Anyway, in my case, I'd choose the RSP one.
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Apr 6, 2003
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When will your company's contribution vested, immediately or a fixed period of time? Mine has a 2-year period.
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Mar 10, 2005
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audit13 wrote:You'd have to pay tax on the non-rsp contribution, right ?
yes, that would be considered a taxable benefit in most cases, so it is just like getting the money as extra wages.
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Sep 30, 2003
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mine matches 50% of my contributions, to a limit of 3% of my gross annual salary.

For those bad in math - if I make $50K a yr gross, and contribute $200/mth, the company will put in an additional $100/month.
If I contributed $400/mth, the company will only put in $125/mth (so the total annual they match is $1,500)
Deal Addict
Jan 1, 2005
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Mine vested immediately. I know some of my co-worker contribut and get the company's matching portion and then withdraw it right away.
tomtong wrote:When will your company's contribution vested, immediately or a fixed period of time? Mine has a 2-year period.
[OP]
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Dec 2, 2004
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engo wrote:I'd say the RSP one sounds better as you defer the tax, have higher after tax money.

But there are other things to conisder such as your tax bracket, cash flow, vacation plan,... Anyway, in my case, I'd choose the RSP one.
I agree but I was also comparing an after tax high interest savings account like ING @ 2.4% return. I'm better off taking a chunk of my paycheck and setting it aside and letting my company match it ! That's free dinero Jose!
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Apr 6, 2003
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engo wrote:Mine vested immediately. I know some of my co-worker contribut and get the company's matching portion and then withdraw it right away.
If yours are vested immediately, I will go for non-RSP contribution so that you can make your decision until you need to, contribute to your RSP or not. It gives you more flexibility and in case you need the cash, you didn't lost your contribution room.

Like your co-workers, they got extra cash right away and pay the income tax of that portion when they file their tax return.

Of course there're other consideration like invested in your RSP will have your interest/capital gain tax sheltered immediately.

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